Insufficient amount: Fitch Ratings estimates India's banks will need nearly $65 billion in bank capital by March 2019. The capital infusion announced by the govt amounts to about half that.
Lack of clarity: There is still lack of clarity on how the recapitalization bonds will be structured thus further creates the confusion in mind of market players.
Bank labour union: Likely opposition of the labour union may derail the government plan for capital infusion by stake sale.
Way Forward
The differentiated funds allocation where stronger banks will likely to be favoured is a positive step. The infusion should be accompanied by banking reforms this is critical; else the capital infusion will set off another wave of bad lending.
In some selective banks the government stake need to be brought down below 51% as given the some of the state owned banks poor financial shape and they fast losing market share in an increasingly digital environment, holding on to them makes little sense.
Further a bad bank need to be established to warehouse the NPAs, leaving banks to operate with clean balance sheets.
Rs 6.92 Lakh Cr Highway Plan Rolled Out To Boost Economy
In News
The government approved the biggest highway construction plan so far in the country to develop approximately 83677 km of roads at an investment of 6.92 lakh crore by 2022.
The programme includes the Bharatmala scheme under which 34800 km of highways would be constructed at the cost of 5.35 lakh crore.
The project also entails constructing 6000 km long inter corridor and feeder routes, 2000 km of border and international connectivity roads, 5000 km to be upgraded under the national corridor efficiency programme, 800 km of greenfield expressways, 10000 km under the national highway development programme and 2000 km of coastal and port connectivity roads.
The government will fund Bharatmala project through market borrowings, central road funds, monetizing government owned road assets and budgetary allocation.
Expected Benefits
Push up growth: The Rs 7 lakh crore additional investments in the Bharatmala project will go a long way in pushing growth and helping bridge the yawning infrastructure deficit.
